Nigerian interbank rates unchanged on maturing bills

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CBN Governor, Mallam Sanusi

Nigerian interbank lending rates ended the week unchanged at an average of 11.33 percent, as maturing treasury bills and anticipated flows of public funds kept the market from tightening.

 The Central Bank repaid about N160 billion ($990 million) on Thursday, in matured open market operation debt notes, swelling liquidity, Reuters reports.

 “The cost of borrowing in the market had gone to an average of 14 percent for overnight in the week because of shortage of funds, but dropped on Friday after the cash flow from matured bills and expectation of budget allocation,” one dealer said.

 Dealers said the market opened with a cash balance of about 76.65 billion naira on Friday, compared with 136 billion naira a week earlier. The secured Open Buy back (OBB) was unchanged at 11 percent, 100 basis points lower than the central bank’s benchmark interest rate. Both overnight placement and call money closed at 11.5 percent apiece, same level last week.

 Traders said rates will drop to around 10.25 percent for overnight next week by the time cash from the May budget allocation to government agencies hits the market.

 Nigeria distributes N620.7 billion in May revenues to its three tiers of government – federal, state and local, but bankers said half of the amount is expected to hit the money market by Monday, helping to provide liquidity support for the banking sector.

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